September 2024 UK Labour Market Report: Employer Optimism, Slow Economic Growth

Discover the latest trends in the UK labour market through the KPMG and REC, UK Report on Jobs, featuring exclusive data insights from recruitment consultancies like Redline Group. This report provides comprehensive monthly overview of labour market dynamics. Here are the key highlights from September’s survey data.

Key Findings From September 2024:

• Permanent staff pay growth slows down.
• Candidate availability continues to rise.
• Permanent job placements declined again in August.

Market Overview

The August data reflects growing concern about UK government’s labour market reforms and their potential impact on business investment. While lower inflation and decelerating salary growth may prompt further interest rate cuts, businesses remain cautious due to economic uncertainties. The report also emphasises upon the growing importance of temporary and contract talent, with 1.42 million temp/contract workers surveyed as of April 2024.

Flexibility - The Key to Contracts:

The August report underscores that flexibility remains crucial in the labour market. With 68% of temp/contract workers prioritising work-life balance, and 34% preferring temporary or contract roles over permanent ones. Despite rising contractor availability, seeing its strongest growth in four months, vacancies dropped for the first time since April, and billings fell for a second consecutive month. Though pay for contract/temp workers increased, growth slowed to its weakest in 3.5 years due to rising candidate availability, increased candidate competition for fewer roles.

Speaking about this, Neil Carberry, REC Chief Executive, commented: “August is always a difficult market to judge because of the summer break, but this month’s survey supports what we have been hearing around the country – employers are still cautious. They are waiting for a clear signal that sustained demand is around the corner. The new government said growth was its main priority – but it needs to deliver now. A vision for a positive, prosperous Britain has to accompany the fiscal realism that is being served up right now. That is the test for the Chancellor and Prime Minister this autumn.”

Engineering Talent in High Demand:

Candidate availability continued to increase for permanent vacancies. Panellists noted that economic uncertainties, redundancies, increased search activity for new roles and fewer placements contributed to the rise in candidates. The growth in permanent salaries also continued but slowed down significantly, marking the weakest increase since March 2024. Despite this, salaries remain higher than historical averages, especially for hard-to-fill roles where candidate supply is limited. As Jon Holt, Chief Executive and Senior Partner of KPMG in the UK, said: “Both employers and job seekers are still facing a challenging period that will require careful long-term planning and adaptability.”

According to the Office for National Statistics (ONS), the number of job vacancies stood at 884,000 in July, still above the pre-pandemic level of 796,000 (March 2020). However, vacancies were 140,000 lower compared to the same period last year.

Despite overall economic uncertainties, engineering roles saw strong demand. Skills shortages were notable in both permanent and temporary positions, particularly in fields like Electrical, Electronics, Mechanical Design, Manufacturing Engineering, Software Development, AI, IT Support, Data Specialists, and Cybersecurity.

Future Outlook:

The August 2024 interest rate cut provided some stability, but businesses are still hesitant to ramp up hiring without clearer signs of economic growth. According to Jon Holt, Chief Executive and Senior Partner at KPMG in the UK:

“While lower inflation has brought welcome stability to some sectors, and despite a first rate cut in August, monetary policy continues to be restrictive, which means that overall business confidence continues to fluctuate.”

Redline Group changes lives every day, building world-class teams for technology companies. We continue to be one of the UK’s most trusted Electronics and High Technology recruitment specialists for professional Contract, Permanent, and Executive positions. With four decades of experience our enthusiastic, knowledge-led people create trusted recruitment solutions. Redline is perfectly positioned to offer advice about futureproofing your permanent, contract and interim needs in the technology sector.  

For more information about this month's report, contact David Collins on DCollins@RedlineGroup.com or call him at 01582 878804.